NEW YORK, April 16 (Reuters) - The gap between legal fees
charged by the top-billing lawyers and those on the lower rungs
is growing wider, according to a study released Monday.
From 2007 to 2011, fees charged by partners who bill at
least $800 per hour increased at nearly three times the rate of
those who billed less than $300 per hour, according to a joint
study by TyMetrix Legal Analytics, a technology company, and
Corporate Executive Board, a research firm.
The study, which analyzed billing data from about 120,000
attorneys, found that overall rates have jumped by more than 4
percent since 2009, compared with a moderate 2.3 percent boost
from 2008 to 2009. From 2007 to 2008, rates jumped 8.2 percent.
Average billing rates climbed to $540 per hour in 2011 from
$435 in 2007.
The rise in rates among top billers, those charging $800 or
more, grew nearly five times faster than the lowest billing
associates who charge about $200 per hour, the study said.
The wide disparity suggests that lawyers have wide latitude
to charge steep fees for high-stakes matters but face stiffer
competition when handling routine work, said Joel Henning, a
consultant for in-house counsel and law firms.
Rates for attorneys working on bet-the-company litigation
and big transactions are "price insensitive," said Henning,
principal of Chicago-based Joel Henning & Associates.
At the same time, he said, competition has grown among
lawyers who handle commodity-type work, including outsourcing
firms and contract attorneys.
"The degree of segmentation in the legal market place is
increasing," Henning said.
The study, which used data from 4,000 law firms, found that
the percentage increases in billing rates for attorneys in law
firms with more than 1,000 lawyers were more than double the
rates of attorneys from smaller firms. The average hourly rates
from 2009 to 2011 for lawyers with 501 to 1,000 increased by 13
percent compared with a 4 percent rate increase at law firms
with 1 to 50 lawyers.
The practice areas with the widest rate disparity were
intellectual property and commercial contracts. The areas with
the narrowest ranges were regulatory and finance.
Although clients are cutting back on the number of firms
they rely on for outside legal work, the rates those firms
charge has increased, the study found. Those findings run
counter to the conventional wisdom, which holds that
consolidating the number of outside firms will reduce a client's
One possible reason for this finding, Henning said, is that
as clients increasingly rely on one firm -- and one group within
a firm -- to handle their matters, the associates on these teams
become more experienced and can charge more.
The rise in billing rates overall is inevitable given the
business model of law firms, said Susan Hackett, chief executive
of Legal Executive Leadership, a consulting firm in Washington,
"Most lawyers are working as many hours as they can. They're
unable to bill many more hours, so they raise their rates," she
(Reporting by Leigh Jones)
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